Whitbread plans to resume the growth ambitions it was forced to scale back through the recession, having reported strong annual results.
The group last week announced that it would ramp up its expansion plans as it revealed that total revenue climbed 7.5% to almost £1.44b for the year to March 2010, with its Premier Inn and Costa brands leading the charge.
Pre-tax profit before exceptional items was up 77% to £160m compared with £90m in 2008/9, despite a slow start to the year.
Outgoing chief executive Alan Parker said the group had "performed strongly in the most challenging hotel and restaurant trading conditions for a decade" by "outperforming markets and improving operational efficiency".
Bolstered by soaring profits at Costa and a stable performance from Premier Inn, Parker - who will be replaced by EasyJet boss Andy Harrison when he retires in November - told Caterer the group was now in a position to resume its growth strategy.
Premier Inn opened an additional 2,400 rooms in 2009 and, with 10,000 rooms already in the pipeline, Whitbread is targeting an expansion to 55,000 rooms in the UK by 2015, as well as international growth.
"Going back a couple of years we were building up to opening 5,000 rooms a year but we brought that down to 1,600 last year," Parker said. "We're still expanding in the toughest trading conditions we've had for a generation but nothing like as much as we'd planned to."
Regional revpar at the budget hotel chain was down 6.4% during the year, ahead of the rest of the market, which suffered an average decline of 8.5%. Sales rose by 4.7% to £630m, although like for like sales were down 4.3%.
Parker said that revpar had improved over the year and, where previously it had been in decline, was now on a par with the year before. He said the goal for the business was now to improve its 70% occupancy.
"We have an ambition to get Premier Inn occupancy back to 80%, where it has been historically," Parker explained.
"That will probably take us three years. In our plans we have built in growth from expanding market share and as growth returns to the market as a whole."
Premier Inn's expansion will be widespread, but in particular it aims to retain and build on its strong presence in London, where it plans a 60% increase in capacity. Of the 10,000 rooms in the pipeline it has plans for 900 in Scotland, 1,000 in northern England, 1,300 in the Midlands and Wales, and 3,000 in London.
"It's a good, strong, secure pipeline, which will be opening over the next three years with a good position in London where we want to maintain our lead," Parker added.
Few restaurants will be added to the group's portfolio, but those that are will be located next to a Premier Inn. With a modest 1.3% growth in revenue to £466m, Parker said the focus on brands including Beefeater, Brewers Fayre and Table Table would be refurbishment.
Some 90 pub restaurants were refurbished last year, of which 60 were Brewers Fayre. A further 60 Beefeaters will be refurbished this year.
Parker added: "We've brought the cost of refurbishment down to £125,000 per unit. That's in part down to better buying but also due to the general reduction in capital expenditure costs."
One thing the public hasn't been cutting down on during the recession is coffee consumption. Profits at Costa soared by 60% to £36.2m in 2009 and revenue was up 23% to £341m. Whitbread has had 32 consecutive quarters of like for like sales growth with Costa and last year saw 5.5% growth.
"Other brands have fallen by the wayside and we believe there's still room for growth," Parker said. "We have 1,100 Costa stores in the UK and believe there is room for 50% more. We're going into new types of site. Costa stores are now doing well in hospitals and universities."
Its expansion has followed the same course as Premier Inn, with both brands equipped to deliver value for money and quality to the customer, and profits to shareholders. Parker said prior to withdrawing from four and five-star hotels, Whitbread's hotels division had been "like being sent to Siberia" but was now "a very different place".
He added: "It provides good returns for our shareholders, it's what our customers like and the simplicity of the business model means it can be expanded.
"We now have around 600 hotels in the UK - which no one's ever remotely had before - and the expansion is far from over."
ALAN PARKER ON...
The economy "It's still uncertain whether we'll have a double dip recession or what will happen after the election. We're responsible and flexible enough - we hope - to be able to cope with whatever happens but we are still having restraint over capital expenditure."
The Digital Economy Bill "The consequences haven't been thought through properly and we'll be working with the British Hospitality Association to make the new Government aware of that."
Retirement "I've had the best job in the country running the best company in the hotel and restaurant business. For me it's been a fantastic opportunity that I've enjoyed every minute of."
WHITBREAD IN NUMBERS
Whitbread employs more than 33,000 people and has 1,800 outlets in the UK
● Premier Inn 40,559 rooms across 600 locations
● Costa 881 stores
● Beefeater 130 restaurants
● Brewers Fayre 130 restaurants
● Table Table 105 restaurants
● Taybarns 7 restaurants
Published by: The Caterer